Rental Gains Offset

Today TaxMama hears from Ed in New York who wants to know. “Can you offset capital gains from the sale of rental property, by capital losses from the sale of stocks?”

Hi Ed,

Good question.

And, as with all tax questions, the answer is – it depends.

When you sell rental property, you fill out Form 4797, Part III.
http://www.irs.gov/pub/irs-pdf/f4797.pdf

That breaks out the profit into two components:
·Ordinary income from the depreciation, which is reported on your Form 1040, line 14
·and Capital gains on the rest of the property – which are reported on Schedule D.

If all your gains from the sale are due to the depreciation you’ve taken, then no, it won’t be offset by capital losses.

But if you have capital gains from the sale of rental property, then they will be offset by capital losses.

And remember, you’ll find answers to lots of questions about capital gains and other tax information, free. Where? At TaxMama.com

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